Friday, January 29, 2010

There was an interesting article on The Infrastructurist a few days ago about the gas tax. It poses the question of whether user fees might be a better idea (my thought: way to complicated to get the same result). And they show a chart of the gas tax since its inception in 1932:

That's interesting, but, well, wrong. If you look at this chart, it sure looks like the gas tax keeps on rising. Look, it's gone up 450 percent since 1982! The government just wants our money! We can't raise the gas tax (seriously, we can't, it's a third rail). But it's not really rising.

Once in a while, we need money. And we raise the gas tax. On the chart below, the blue line is the same as the chart above—see how it rises? Now look at the red line. That's the same value—except adjusted for inflation. Once adjusted, the gas tax has varied, from about 9 cents to about 29 cents, in the past 80 years.

It's interesting when it was raised: first in the 1950s (when the Interstate system was funded) and then in the 1980s, after the oil scare. And if it seems like it's taken a while since it was last raised, look at 1959 to 1982, when it went from an inflation-adjusted 29 cents to an inflation-adjusted nine. If we wait that long, it will take until the end of this decade to raise the gas tax—and it still won't fall as far as it did in the late 1970s unless we have dramatic inflation again. So, yes, the gas tax should go up. But, no, it's not at a historically low level. However, we haven't really raised the gas tax, well, ever. We only raise it as a reaction to it being too low. (Gas tax data from here, inflation data from BLS)

Quickly, why is the gas tax good? Well, first, why is it bad? It's regressive. Everyone pays the same. But why is it good? Well, in addition to raising revenue, it has tons of positive externalities. It taxes heavy users more than light ones (and people without cars get off scot-free). It encourages people who need to drive to buy smaller, more fuel-efficient automobiles. It encourages people to move to areas where they don't need a vehicle, which are inherently more efficient. Less petrol consumption means less pressure on us to buy oil from unstable, foreign nations. It's very economically sound: you're not forcing anyone to do anything, but you are able to affect change simply through taxation. And, finally, it's really, really hard to get around. Smuggling gasoline is hard, and gasoline is bulky and dangerous to transport. Drugs and cigarettes are easy to sell on the black market. Gasoline? Not so much.

I'm sure we'll get to the gas tax more in the future. But, for now, remember this chart.

(Yeah, I know I haven't been posting here in a while. Skiing has gotten in the way.)